Financial News

Car Insurance Premium Falls 'Hit The Brakes'

One of the UK's biggest car insurance firms has warned that the recent fall in premium costs may be ending, despite regulatory efforts to bring bills down further.

In its half year results statement on Wednesday, Admiral's chief executive signalled that the decline of recent years across the industry could soon be halted.

Henry Engelhardt said: "In the UK there are some signs that premiums are no longer falling but we have yet to see firm evidence of†an inflection point and a return to premium growth.

"Admiral's premium rates have been pretty flat over†the first half of the year, though as a result of the reductions in 2013, total premiums are down around 9%†compared with the first half of 2013."

Car insurance costs have fallen since late 2012 amid industry and Government efforts to combat fraud - particularly over whiplash claims.

The AA charted a 16.6% decline in average Comprehensive cover costs in 2013 to £531 while the figure for third party, fire and theft stood at £725 - down more than 18%.

The competition regulator announced in June a series of measures to help bring down the costs of insuring a car further.

The Competition and Markets Authority (CMA) proposed imposing a cap on replacement vehicle costs passed on to an at-fault driver following an accident - estimated to currently total up to £180m annually.

It also wanted to ban price parity agreements between price comparison websites and insurers, which stop insurers from making their products available to consumers elsewhere more cheaply.

Admiral credited a 9% increase in customer numbers for†a modest 1% increase in group profit before tax to £183.3m during the first six months of the year.

It reported UK car insurance profit before tax at £207.7m - a rise of 8% on the same period last year - but said expectations for its UK business remain unchanged for 2014 as a whole.

Its shares fell more than 6% at one stage on the FTSE 100 on Wednesday in reaction to the results statement.